Apple Stock Likely to Get a Booster Shot
Apple Inc. (NASDAQ:AAPL) has hit the headlines again due to an exciting piece of news that surfaced over the weekend. Reports hinted that Apple’s secret project, believed to be closed down, is indeed quite alive and kicking. The secret tech that the company has been working on is still very much on the agenda. In the post-Donald Trump election environment of gloom and doom in the tech sector, could this be the boost that Apple stock needs?
In a letter dated November 22, Apple Inc.’s director of product integrity, Steve Kenner, wrote to the U.S. National Highway Traffic Safety Administration (NHTSA), providing his comments on the proposed Federal Automated Vehicles Policy. (Source: “Docket No. NHTSA-2016-0090,” Regulations.gov, November 22, 2016.)
Apple believes that this policy will be fundamental to ensuring the safety and public acceptance of automated vehicles, while providing a flexible path for innovation. The letter further mentioned that the company is investing heavily in the study of machine learning and automation, and is excited about the potential of automated systems in many areas, including transportation.
The move into promising new areas of growth is important for Apple stock, which is likely to struggle with “iPhone” sales in the near future. This pessimism has been weighing on Apple stock for quite some time now. The company is under pressure to prove that it is investing in technologies of the future.
Autonomous driving technology is one such growth area for companies today, and the letter highlights Apple Inc.’s interest in the self-driving technology. On the issue of automated vehicles, Apple said that “it is vital that those developing and deploying automated vehicles follow rigorous safety principles in design and production.” (Source: Ibid.)
Moreover, Apple focused on the need to foster innovation, improve regulatory flexibility, and encourage the development of life-saving technology.
Apple also agreed that companies should share de-identified scenario and dynamics data from crashes and near-misses. But data sharing should not come at the cost of privacy. The company supports NHTSA’s privacy principles.
The letter is an open acknowledgment that the “Mac” maker is working on self-driving software, if not the long-rumored “Apple Car.” Apple began working on its secret car project called “Project Titan” in 2014, but myriad issues led to the shelving of the project.
However, this letter confirms the interest of the smartphone maker in self-driving capability in vehicles. This may lead, in the future, to the licensing of its software to other carmakers. A number of auto manufacturers have made clear their plans for electric vehicles in the coming years. With competition in the electric vehicle category heating up, Apple Inc. may turn out to gain from this strategy, and this may lift AAPL stock.
The Apple iPhone is facing increased competition from Alphabet Inc’s (NASDAQ: GOOG, GOOGL) “Pixel” and other smartphone manufacturers. Moreover, President-elect Donald Trump’s insistence on manufacturing Apple products in the U.S. is weighing on Apple stock.
Hence, it is important for the company to focus on new growth areas, and autonomous driving technology looks like a good fit. In September this year, it was also reported that after laying off dozens of employees from its Project Titan, Apple was in talks with other vehicle technology companies like McLaren and Lit Motors Inc. (Source: “Apple Is Said to Be Talking to Vehicle Technology Companies,” The New York Times, September 21, 2016.)
This indicates that Apple may also be working on its car, together with the development of self-driving software.
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Bottom Line on AAPL Stock
Apple stock has been pretty volatile since Donald Trump won the presidential election last month. With many uncertainties hovering around AAPL stock at present, the time is ripe for Apple Inc. to diversify and venture into new promising areas. Apple stock activity would be really brought to life if the company makes some acquisition announcements.